Many people today are struggling with their finances, and finding it hard to keep up with their expenses. In fact, a surprising number of people live the stressful, paycheck to paycheck life, which means that sometimes these people don’t have enough to cover their bills at the end of the month, and have to hold their breath, hoping against hope that the bank will cover the overdraft amounts. This is really no way to live, and you really need to start thinking about your children when it comes to your finances. We reproduce what we are, not what we say, and our children, after growing up in such a volatile financial environment, will more than likely just keep the harmful cycle going, and pass it on to your grandchildren too.
One of the main reasons why people end up living paycheck to paycheck is that they don’t have a plan. When it comes to your finances, you simply cannot take it one day at a time; you have to think about and plan for the future. If you are barely making it on your salaries now, what are you going to do when you are retired and living on just your pension checks? One or both of you may have a great pension plan with work, but I think we can learn from the recent items in the economy news that your job’s pension plan may not be as secure as you thought!
The first thing you need to do when it comes to making a plan, is to create a household budget. A good budget is one that allows some spending money, while still paying all of the monthly bills regularly, and also pays down your debts. A bad budget would be one that only focuses on one bill at a time, or one that sets you up for failure through unrealistic goals.
Make sure you do this one together; this way you can both make the big decisions on how much money to allot to your different bills and expenses, and the decisions made will be final. Make a list of all of your expenses and bills, and then create 2 lists out of that 1 list – variable expenses and fixed expenses. Then, make another list with every source of income you have coming in. Hopefully when you subtract the expenses from the income, you will have money left over to play with. If not, you will need to brainstorm together for ways to make extra cash each week or each month.
If you have some money left over, you can now decide the amounts to want to put on your debts and what you need for spending money. No matter how much you have left over in your budget, you will still need to look at downsizing those variable expenses. If there is a way to cut some or all of them down, then do it, with the thought of paying off your debts and saving for the future in mind.
Another helpful thing you can do is set up automatic bill payments, and write down the amounts coming out on the appropriate days in your calendar. This way you will never be caught off guard with a late payment.